Auto ancillary stocks with low PE ratio than industry average to add to keep on your radar

A stock is said to be an “undervalued” one when the price-to-earnings (P/E) ratio of the company is lesser than the P/E ratio of the industry the company is engaged in. 

Listed below are two stocks in the ‘Auto Ancillary’ segment having a P/E ratio lesser than that of the industry: 

Samvardhana Motherson International Limited 

With a market capitalization of Rs 66,651.53 crores, the stocks of Samvardhana Motherson International Limited closed at Rs 98.36 on Friday, slipping around 0.30 percent compared to the previous closing levels of Rs 98.61 apiece. 

The company’s stock is trading near its 52-week high mark which was recorded at Rs 103.50. The company has a P/E of 34.12 which is less as compared to the industry’s P/E of 39.05. 

Year-on-Year, the company has been successful in increasing its operating revenues with the most recent movement being from Rs 63,536 crores during FY21-22 to Rs 78,700 crores during FY22-23. Moreover, the company’s after-tax profits increased from Rs 801 crores to Rs 1,713 crores keeping the timeframe the same. 

In addition, the profitability metrics of the company improved with the return on equity (RoE) increasing from 4.24 percent during FY21-22 to 6.66 percent during FY22-23 and the return on capital employed (RoCE) taking a shift from 5.88 percent to 9.69 percent. 

Minda Corporation Limited 

With a market capitalization of Rs 8,186.08 crores, the stocks of Minda Corporation Limited closed at Rs 342.40 on Friday, a flat movement as compared to the previous close of Rs 342.55 apiece. 

The company’s stock is trading near its 52-week high mark which was recorded at Rs 355.45. The company has a P/E of 29.53 which is less as compared to the industry’s P/E of 39.0. 

Year-on-Year, the company has been successful in increasing its operating revenues with the most recent movement being from Rs 2,975 crores during FY21-22 to Rs 4,300 crores during FY22-23. Moreover, the company’s after-tax profits increased from Rs 184 crores to Rs 294 crores keeping the timeframe the same. 

In addition, the profitability metrics of the company improved with the return on equity (RoE) increasing from 14.47 percent during FY21-22 to 17.93 percent during FY22-23 and the return on capital employed (RoCE) taking a shift from 13.20 percent to 17.34 percent.

Written by Amit Madnani

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